The U.S. economy grew 2.1% in the final three months of 2019 amid a dip in spending by consumers and businesses.
The country’s gross domestic product — the total output for goods and services — for the period matched third-quarter growth, the Commerce Department reported in its initial estimate on Thursday. The economy expanded at rate of 2.3% for all of 2019, down from 2.9% the previous year and the weakest performance since 2016.
For the October-December quarter, growth was supported by solid but slower consumer spending and an improvement in the trade deficit. Those factors offset a further drop in business investment in new plants and equipment and a slowdown in restocking store shelves.
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Economists look for even slower growth in 2020 of around 1.8%. But that outcome could be threatened by various threats, including a spreading coronavirus in China to a flare-up in trade tensions between the U.S. and China.
“Consumer confidence and earnings forecasts have shown us that skepticism for the economy’s longer-term prospects are starting to have a marked impact,” Steve Rick, chief economist at CUNA Mutual Group, told investors in a research note. Pressures from the geopolitical environment and a changing trade landscape aren’t helping, either.”
Despite the decline in spending last quarter, Fitch Ratings chief economist Brian Coulton thinks consumers continue to spend at a healthy clip. Consumer spending accounts for roughly two-thirds of economic activity.
U.S. growth is also being supported by the lowest jobless rate in half a century, with unemployment at 3.5%. Paul Ashworth of Capital Economics said in a report that he expects economic activity to gradually accelerate this year, citing a decline in U.S.-China trade tensions.
